Chargebacks are the scourge of any MLM business. Over the years, I have had the unfortunate experience of watching numerous Direct Selling businesses go under - in as little as one month's time - because of unanticipated chargebacks and fraud.

There is no way to completely avoid chargebacks - in this day and age, the credit card companies make it all too easy. But there are a number of steps you can take to minimize them so that your business is protected and your future secure.

1. Set realistic expectations

• Display product delivery times prominently and often.
• Make sure the terms of service documentation is visible and easily accessible throughout the site.
• Highlight the opportunities for new distributors but be careful NOT to make any promises.

2. Refunds, refunds, refunds

• Give your refund policy prominent visibility on all documentation and throughout the site.
• Carefully word your refund policy to encourage refunds instead of chargebacks - (refunds costs you much less than chargebacks).

3. Be reachable

• Make your contact information highly visible.
• Make sure there is someone to speak with during the times posted; a frustrated member will immediately call his credit card company if he can\'t get in touch with you easily.

4. Do not make people jump through hoops to get out of auto-ships and programs

• Make it as easy as possible to get out of a program, as it was to get in.
• Consider an "opt-in" billing system for new members during their first couple of months.

5. Make sure your down-line is not misrepresenting your company

• Be diligent in making sure that your message is being consistently transmitted all the way down the line.
• Call new members to welcome them aboard and subtly find out what they just bought into.
• Keep an eye out for patterns of chargebacks and complaints stemming from one distributor.

6. Collect and store all documentation for fighting chargebacks

• Keep hard copies of all contracts, delivery receipts, IDs and usage/shipping logs.

7. Do not accept credit cards that do not belong to the purchaser

• Only accept transactions from the original cardholders. If you choose to accept payment with a third person\'s card, make sure you speak to the original cardholder or get a copy of their ID.

8. Do not let the same card make multiple purchases in a short period of time

• Be sure the buy now button can only be pressed once in the check-out process on your web site.
• Set fraud parameters to limit cards to an acceptable number of purchases per fixed timeframe.

9. When possible perform cardholder authentication checks

• Use Visa\'s Verified by Visa and MasterCard Secure Code.

10. If things appear too good to be true...

• Keep your eyes peeled for fraud.
• Train your employees to recognize irregular/suspicious transactions..
• Conduct regular audits on all transactions.
• Be cautious with large migrations into your program - investigate them carefully.

About Author

Scott Fitzpatrick is the National Account Executive at Pivotal Payments, the leading provider of payment processing solutions for the Direct Selling Industry. He is also a regular fixture on the MLMIA, the DSA and the MLM Startup circuits.